That is true of any valuable service. For instance majority of UK population need, may be even want a financial planner but most can’t afford one. However, this highlights a certain kind of thinking; viewing paraplanners as a cost centre within a financial planning business. The thinking goes: A firm hires a paraplanner (in-house or outsourced), pays a proportion of their revenue and this has a negative effect on their bottom line.
I think this misses the point of having paraplanning support. To my mind, the point of using paraplanners is to enable advisers be more successful and profitable. There is little point otherwise.
The phrase ‘value for money’ is often thrown around in this type of conversation but what does it really mean? To my mind, ‘value’ means giving people something they want/need more than the money they willing to pay for it. So, an adviser pays a paraplanner because they value the service more than the money they hand to the paraplanner. If that weren’t the case, no one in the right mind would hire paraplanners.
The main benefit of having paraplanning support is to free up advisers to spend more time with existing clients (which protects existing revenue), build new relationships with professional connections and focus efforts on marketing/acquiring new clients. I should think these have positive impacts on the bottom line.
There are other ways paraplanning has direct impact on the bottom line. I know some firms actually bill out their paraplanners’ time (obviously for more than they pay the paraplanner), and it’s not unusual for paraplanners to support advisers in the process of pitching for new business. Advisers will sometimes come to us when they are going to pitch a big business and ask us to highlight potential planning opportunities with the client. I believe this improves success rate.
The upshot of this is that firms who know how to get the best from their paraplanner(s) rarely think of them as a cost centre; rather they that enables an adviser to earn more and do a better job with clients.